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At a time when most companies are working hard to persuade three out of four workers to participate in their 401(k) retirement plans, an electric company based in Charlotte, N.C., last year pushed its enrollment rate to 98% from 95%, combining new strategies both in plan design and benefit communication.

The experience of Duke Power Co. and other successful sponsors of defined contribution plans shows that protracted reluctance of employees to invest some of their income in long-term, tax-advantaged savings programs can be overcome, even at a time when many employees feel incapable of saving or are confused by the multitude of financial options available.

Duke Power, an investor-owned utility serving much of North Carolina and South Carolina, is a prime example of an employer that decided to make its 401(k) plan a key component of its 16,500 workers' benefits ensemble. Several years ago, employees felt reliant on the company's defined benefit pension plan and saw the 401(k) plan "as gravy, or icing on the cake," said Jeff Allee, communications manager of compensation and benefits.

That changed recently when the company took several steps toward making the 401(k) plan too attractive to ignore. It abandoned a graduated scale of participation levels that limited the benefits the plan afforded and instead substituted a blanket rule for everyone: All employees could contribute 6% of their earnings to savings with some kind of a match. The first 3% would be matched by the company on a 1-to-1 basis and the second 3% on a 50% basis. Employees also could choose to put in up to 4% more of their income without any match from Duke but with the tax-sheltering advantages of a 401(k) plan.

After the plan changes, the average employee contribution rate rose to 6.5% from 3%, Mr. Allee said.

The tiering of company matches is an excellent way to improve participation in a retirement program, because psychologically, employees think, "I can afford to do 3%," according to Melanie Langsett, senior consultant for Aon Consulting in Atlanta.

"Just make it a deal they can't turn down," she said. "The bottom line is make sure participants understand the benefits of pretax saving and pretax asset accumulation."

Experts on retirement programssay employers can hasten workers' entry into these plans simply by removing some of the artificial barriers that may exist. For example, several companies, though still a small minority, have introduced so-called "negative" or "automatic" enrollment, in which the employee is made part of the plan upon hiring, or after a customary waiting period, unless he or she specifically signs a waiver opting out of the plan.

Automatic enrollment has not seemed to generate much negative employee reaction where it has been tried and has not sparked legal challenges, said Rich Koski, a principal at Buck Consultants Inc. in Secaucus, N.J. It is not enough, however, to get the employees in the plan through an automatic intake pump, because most such workers will wind up with their investments in a default fund with the lowest possible per-check deduction, he said. Ongoing communication touting the benefits of increased contribution then becomes essential, Mr. Koski said.

But automatic enrollment, though seemingly a boon to any campaign to increase fund enrollment, is not recommended by all analysts. More preferable, said Dennis Coleman, a principal in The Kwasha Lipton Group in Fort Lee, N.J., is "simplified enrollment," in which the new hire is specifically asked at the initial post-hire interview with human resources staff if he or she would like to enroll in a defined contribution plan. The new employee has a clearer opportunity to select participation than under automatic enrollment.

Highly compensated company executives who are eager to see lower-paid workers' investment in plans increase, so as to help the plan to pass federal non-discrimination tests, still would see a benefit from simplified enrollment rather than an automatic process, Mr. Koski said. And no workers would be denied free choice.

"I think there are some potential problems with it (automatic enrollment), because the person really hasn't authorized a reduction in his pay," said Mr. Koski. But in simplified enrollment, "You make it clear at any time you can make the change from a positive election to a negative election."

Kwasha Lipton advises any employer considering automatic enrollment to first obtain a favorable determination letter from the Internal Revenue Service. And Ms. Langsett of Aon warns, "I would argue there is a huge portion of the work force that is so trusting and so naive they wouldn't catch it until they see it in their paycheck."

Having an employee match is an obvious and often highly effective tactic an employer can use to boost retirement plan enrollment. Though the value of matching may seem intuitive, many employers maintain plans with no match and lackluster employee involvement. According to a study by Buck last year, 9% of companies surveyed still make no matching contribution to their 401(k) plans. Most-63% of those surveyed-contributed a fixed amount per dollar up to a maximum percentage of salary.

As of the end of 1996, there were 248,000 401(k) plans, according to Access Research Inc., a financial services consulting firm in Windsor, Conn.

According to a 1996 Buck survey, the average participation rate was 78% in the 586 plans surveyed (BI, Oct. 21, 1996).

Allowing employees greater access to loans is another way of enticing more employees to take part in defined contribution plans, especially young workers reluctant to part with their earnings in case they may need it for a car or home purchase.

According to a study commissioned by Hartford, Conn.-based CIGNA Retirement & Investment Services last year, those plans that have achieved at least 90% participation have mainly been those that have a loan option but neither encourage nor discourage its use. In other words, simply having loans available appears to quietly draw employees into the savings fold.

Being unable to offer employees loans from their investment can limit the growth of a defined contribution plan. At Denver Water, an independent municipal department with 1,000 employees, the agency provides neither matching contributions nor allows any employee money to be removed from its Section 457 plan-deferred compensation held by government entities-until the retirement or death of the worker. It has achieved only 55% participation among its workers, said James E. Crockett, manager of risk and benefits.

Even if no provisions for a company match or loans exist, however, employees continue to stream into the agency's 457 plan out of economic insecurity, he said.

"They've been listening to the Social Security horror stories," he said. "Now we're asking people to do an analysis of their retirement needs, being aware that a large portion will have to come from their own savings."

A problem for benefit managers that is as challenging as getting workers into defined contribution plans is maintaining their interest in the programs and spurring more savings as time passes. That requires intense, creative and ongoing communication of the advantages of savings to employees, and more companies have moved beyond the basics to sophisticated investor education programs.

"A really good communication campaign can be the difference between a 60% participation rate and an 85% or 90% participation rate," said Mr. Coleman.

A case in point is Stamford, Conn.-based Welbilt Corp., a manufacturer of food service equipment that employs about 2,600 people. Welbilt has achieved 82% participation in its 401(k) plan through a series of promotional meetings held at its 10 primary worksites around the United States. The meetings were held with representatives from FMR Corp. of Boston, better known as Fidelity Investments, its plan administrator.

The gatherings at worksites began in 1995 and were flavored "with a little more excitement, sort of like employers do their United Way campaigns," said Susan Jenson-Fegan, vp of human resources and benefits.

"We're not trying to pressure the employee to jump in; we're trying to educate them," she said.

But there were carrots. The company held contests to spur workers to join the plan or to increase their contributions, with raffles deter-mining the winners of prizes, such as gift certificates. In the first three months, participation in the plan increased to 82% from 76%, Ms. Jenson-Fegan said.

Companies should supply employees with a large amount of varied material on retirement savings, which may include printed promotions, videos and software models-sometimes accessible over the Internet-that show the potential growth of investments over time.

"The information going out to employees now is more complex," said Paul Sanchez, national communication and education practice director for Watson Wyatt Worldwide in New York. "There's more of it. It's more personalized, and it's coming to them in a host of new media."

But because defined contribution plans are a very complicated topic, trying to compress information about them onto a video may be counterproductive, said Monica Jerussi, a principal at Kwasha Lipton.

Companies can use targeted marketing strategies to advertise the benefits of tax-deferred savings to different audiences within the workplace, said Ms. Langsett. Audiences with different levels of understanding or concerns may include lesser-paid vs. higher-paid workers, older vs. younger workers, and those with college educations vs. those without.

Typically, companies provide employees with fund prospectuses but may stop short of advising on the strengths of different types of investments-for example, the recommendation of stock-heavy mutual funds for those younger employees willing to ride out long-term risks. In such cases, employers may be fearful of treading too closely to giving employees blatant financial advice, a practice that may violate federal law.

The hiring of outside, certified financial planners to guide employees in their investments is becoming increasingly common, though, and encourages employees to invest more, plan sponsors say. At Duke Power, the company has approved three investment counseling firms to do seminars on request by employees, Mr. Allee said. But before long, Duke plans to set up a more formal relationship with a financial counselor for its employees.